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An Evaluation of Energy Program Needs For Minnesota Non Profit Organizations

As part of a new initiative in the area of energy efficiency, the McKnight Foundation retained the Center for Energy and the Urban Environment (CEUE) to survey their recent grant recipients about their level of familiarity and concern regarding energy efficiency issues and about any efficiency measures or programs they had already implemented or were considering implementing. If they were considering any such actions, they were also asked about barriers to taking those actions and about how they might be assisted in carrying them out. It was expected that this information would help in defining the most useful types of programs to include in the energy efficiency initiative.

Preliminary discussions indicated that there were three distinct subgroups of grant recipients that should be surveyed with different survey instruments appropriate to their particular situations. Housing providers would primarily be asked about their energy efficiency standards and practices in new construction, rehabbing, and/or upgrading of rental properties. Community development organizations would primarily be asked what role energy efficiency issues plays in the services they offer to other individuals, community groups, and businesses. Non-profits that own their own buildings would primarily be asked about the characteristics of their buildings, efficiency measures they had already taken, and any further measures they were considering. If they were considering further measures, they were also asked what barriers had prevented them from being implemented already and how they made decisions about whether to take such actions.

There were relatively small numbers of housing providers and community development organizations, so every organization was surveyed by telephone. All seven of the housing providers and 13 of the 14 community development organizations were successfully contacted. Since it was neither feasible nor strictly necessary to survey all 111 nonprofit building owners, it was decided that the best balance of statistical reliability and labor requirements would be achieved by taking a random sample of 30-40 cases. A pilot survey was developed and tested on three cases, then a slightly revised instrument was sent to a further sample of 47 cases by mail with limited phone follow-ups. The survey was split into two sections. The first section consisted of questions pertaining to the organization and the second dealt with information about each building owned by the organization. Surveys were received for the three pilot cases and 36 cases from the primary sample, of which five turned out not to actually own their buildings. This yielded 34 usable survey responses and a response rate among owners of 76%.

Buildings owned by grant recipients turned out to be similar in many ways to small commercial and multifamily buildings studied in previous projects conducted by CEUE. This means that there should be considerable carry-over regarding the most promising efficiency measures and the availability of existing programs to deliver them. They are comparable in total floor area, age, and heating/cooling systems to small commercial buildings, and about one sixth have the right combination of size and heating type to make the retrofits used in multifamily buildings applicable and cost-effective here as well. Their lighting is comparable to that of small commercial buildings.

However, with even more incandescent lighting and only 24% having done any sort of lighting upgrade, it is likely that lighting retrofits will be even more important among non-profits. There are a number of residential buildings, some quite large, where water heating retrofits and low-flow shower heads will be worth considering. There are a wide range of other energy end uses present that may offer savings potential, but site specific energy audits would be needed to determine this. Some measures have already been taken by these respondents, but it appears that there is much still to be done. The main barriers to implementing these sorts of measures are partly informational (where we received mixed signals about their staff expertise in the energy area and about their access to adequate information) but more importantly economic. They reported low cash financing limits, frequent inability to arrange loan financing, and rather short payback criteria. Their payback limits are not much different from small commercial respondents, however, and there certainly are measures that meet even their restrictive criteria. This is especially true with the existence of utility rebates or with grants or loan buy-downs to improve the economics.

CEDE believes that a comprehensive, one-stop energy management program with positive cash flow financing would achieve a high rate of implemented energy measures and provide the most significant benefit to the nonprofits that own their own buildings. The creative financing would address the major concern of the nonprofits - lack of cash. From the program provider's viewpoint, this financial approach would serve a larger number of organizations than a grant-only program with the same level of funding. A comprehensive audit for both gas and electric uses would simplify the process of obtaining useful information on energy retrofits. This should be especially important to smaller nonprofits that do not have someone on staff that has energy management as a primary responsibility. Finally, bid and construction management would remove barriers caused by lack of available time and familiarity with companies in the appropriate trades.

The seven housing providers are involved in a variety of different activities including new construction, rehab work, rental management, and mortgages for new and existing housing. All of the agencies declared at least some interest in energy issues, with five stating that energy cost reduction played some role in their mission and two stating that it played a major role. All of the organizations involved in new construction and rehab follow the Minnesota Energy Code for their work and seldom, if ever, go beyond energy code requirements. While they identified a number of additional energy measures that could be implemented, costing from $800 to $3,500 per unit, the primary reason for not doing so was lack of available funds or restrictions on HUD funds. Overall, the groups with rental properties place a high priority on energy bills, but there is little consistency between the groups in the responsibility for the bills (i.e. owner or occupant) and relative magnitude of the bills compared to other operating costs. These groups also seemed to have more restrictive payback criteria than nonprofits that own their own buildings. The need for information on energy retrofits is unclear. Almost every group stated that they had adequate access to expertise in identifying energy improvements and that typically one or more staff members were responsible for their design criteria. At the same time, all the organizations felt that information on retrofits would be a somewhat helpful or essential component of an energy program. The availability of grants was noted to be essential by all of the groups and three of the six suggestions for help from McKnight involved grant requests.

The proposed energy programs for housing providers address the need for building energy improvements for all the organizations as well as assistance for implementing retrofits and effective tenant education for the agencies that manage rental property. Agencies involved in new construction and rehab work have little need for informational or contractor liaison programs, but it is critically important to provide positive cash flow financing for energy measures that go beyond the current energy code requirements and are shown to be cost effective. It is anticipated that this financing may have to be somewhat more flexible for compatibility with the various restrictions placed on these organizations by their funding agencies. Costs for administering the program can be minimized by developing a set of standard tables or formulas to compute the retrofit incremental costs and savings. In addition, efforts should be made to identify and make full use of existing sources of financing or service delivery.

Rental property owners require both creative financing and a full one-stop service to implement improvements in their buildings. Their tenants should also participate in educational programs to affect their energy use habits and thereby ensure that the retrofits installed in their buildings will have their full potential impact. Education can also provide important secondary benefits through improving their household budgets and fostering the attitude that they really can take some control of their lives and change them for the better.

The community development organizations surveyed vary widely in their missions and programs, with corresponding differences in the role of energy efficiency. Several organizations work primarily with neighborhood groups and consider energy an issue only to the extent that they are involved with housing rehabilitation or low income weatherization (but those organizations consider it a major issue). A few respondents deal mostly with small businesses to foster economic development, and energy is only an issue in making sure that they and their clients are aware of energy cost reduction measures they could apply to their own buildings. The remaining organizations are more regional in scope, and several of them have done research relating to energy use and efficiency on a broader level, such as alternative energy sources or efficient urban transit systems. If additional funds were available most organizations would simply continue or expand these same types of programs, and they see the most useful assistance from McKnight to be in providing informational services and grant money.

There are no easily identifiable energy programs that could be applied to all the community development agencies. In general, these agencies can be split into two groups. Members of the first group are involved in rehab or weatherization work much like the housing providers and could therefore benefit from the same sorts of retrofit and educational programs recommended for that sector. Energy efficiency issues have little impact on the mission of the second group of eight agencies. However, many of these agencies have strong ties with neighborhood groups and could be used to help deliver neighborhood-based energy programs. Other agencies are also involved with small businesses and may be interested in a program to improve the energy efficiency of their clients.